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Developing a federated model of General Practice: Quick financial tips

  • 18th March 2014

Developing a federated model of General Practice: Quick financial tips

As promised in our last blog, this edition focuses solely on two questions we are commonly asked: 

1. Does the company need to be VAT registered?

2. How do we get the finances moving in order to start to demonstrate to procurement teams we are a viable operation?

With regard to VAT the short answer is no, the company does not need to be registered.

To further explain…..

If a registered healthcare professional performs services, the primary purpose of which is the protection, maintenance or restoration of the health of the person concerned, these services are exempt from VAT.

The expectation is that the provider company will be tendering for healthcare contracts and as such the need for VAT registration is removed.

When it comes to getting your finances moving there are a number of ideas we can share. For those who are currently working with us we have been able to introduce a benefits package early in the process where the practices are making savings through being part of the combined buying power of the organisation. This includes significant savings on insurance, utilities, consumables, equipment, near patient testing and much more. This is something we introduce as soon as the federation set up gets underway and invariably we have been able to save the practices the cost of their initial investment and often much more.

As part of that process we have also spotted a way to avoid seeing your initial investment tied up in shares - there really is no need for this, and it will leave your money free for use by the company.

As a legal entity you will now be an attractive partner for other local organisations, not least the foundation trust/hospital trust and community services, who might be willing to enter in to a prime or principle contract with you (these are new contract model which allow for subcontracting - more about that in a future issue).  Their interest will hinge on your ability to demonstrate you can deliver high quality, consistently well and across all member practices.  Nobody wants to contract variation, meaning you will need to find some small projects that allow you to demonstrate you can achieve implementation with minimal variation, and certainly none that cannot be explained. This is another area where we have examples from other federations that work with us of how you can easily achieve this.

The CCG may also be interested in contracting with you for items such as the local education meetings.  While this is unlikely to generate you income it will generate you turnover through your accounts and allow you to demonstrate you can deliver effectively.

There are other options you can use to get the finances moving; however, those above should give you more than enough to get you started.

In our next issue, we will look at the options you have when it comes to forming a company; do you go for profit or not for profit? Are there any advantages to either model?  

For more information on how we can support you in forming a federation, or to arrange to speak to one of our federation experts please contact or call 0191 653 1022.

Who writes this?

Scott Mckenzie

Scott Mckenzie

NHS Management Consultant
Find out more about Scott
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    Practice Manager
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    Westbourne Medical Group, Sunderland
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